If you have already had reason to investigate our process agent service here at London Registrars, you may already know the basics of what a process agent does.

UK process agents are also sometimes referred to as service agents or agents for service of process. Their responsibility is to accept service of notices, proceedings or documents on behalf of their (usually) overseas clients. A process agent service can therefore be invaluable in situations where the serving of a notice cannot happen abroad, or it would be difficult to accomplish this.

In what exact situations may a process agent service be needed?

One typical example of a process agency arrangement would be where an entity based in another country enters into a loan agreement with a bank in the UK, or with the European Bank for Reconstruction and Development (EBRD).

Another scenario may entail an overseas client entering into a large hire or purchase agreement with a UK supplier, where the foreign entity will be subject for a number of years to terms based on UK law and jurisdiction.

Contracts and loan agreements like this may have a clause written into them whereby the overseas entity must enter into a process agency agreement for the entirety of the loan or hire period. This would mean that in the event of the foreign entity breaching its agreed terms or falling behind with loan repayments, service of any court claim papers would be made on the process agent.

This would ensure that a correct procedure is followed for the serving of papers to start court or arbitration proceedings, in line with the Civil Procedure Rules. It would then be the process agent’s responsibility to forward the papers to their client who appointed them (‘the Appointor’).

A process agent service can deliver both time and cost benefits

When a process agent is in place for a foreign entity involved in an agreement like the above, the counterparty (often the Seller or the Lendor) knows that service of the court papers on the UK process agent constitutes proper service and allows the court proceedings to run their course, without the uncertainty, extra costs and hassle that would be involved if the court papers had to be served on the foreign entity abroad.

It is worth noting that the appointment of a process agent is strangely triangular in that the appointment primarily serves the counterparty (the Lendor or the Seller, etc) and not the Appointor (the Borrower or Purchaser) who is obliged by contract to appoint the process agent and enter into the process agency agreement (and generally bears the cost of this).

Nor are process agents of relevance only to companies

It would be easy to presume from all of the above that only companies engaged in commercial transactions would ever need to seek a process agent service.

In recent years, foreign-based individuals or couples who wish to obtain a mortgage or loan for a UK property purchase have also frequently been asked to secure a process agent’s services.

In conclusion, process agents routinely play a crucial role for both organisations and individuals that are based overseas, but looking to enter a contract or agreement with a bank, lendor or supplier in the UK, and frequently the bank, lendor or supplier asks for confirmation direct from the process agent that the process agent has indeed taken on the appointment.

If you have been told – whether as an individual or organisation – that you need to appoint a process agent, our team at London Registrars can provide assistance and guidance from your first point of contact with us, right through to the executed agreement. If you wish to contact us, please email [email protected] or call 07415 107 436.

February 2021

If your organisation has been considering getting some assistance with company secretarial compliance, one of our basic company secretarial subscriptions might be of interest to you. For this, or similar services, you may be interested in receiving a refresher on the company secretary’s role within an organisation, and why it is so important.

Company secretaries are individuals with a broad skill set who exert considerable influence on how an organisation is directed and controlled.

While the given company’s general strategy and decision-making are key here, a company secretary also plays an important role in ensuring that all of the organisation’s activities comply with ethical, legal and regulatory requirements.

The scope of company secretarial responsibilities

Company secretaries can be found working across all manner of organisations – including the public, private and not-for-profit sectors.

The exact responsibilities a given company secretary has will depend to a great extent on the level of their role, the size of the organisation they are working for, and the organisation’s sector.

Nonetheless, there are certain general duties that company secretaries tend to have. These include guiding the chairman and the board on their responsibilities in accordance with the rules and regulations to which they are subject, and on how they should discharge those responsibilities.

A company secretary can also serve as an invaluable source of support for the chairman in ensuring the effective and efficient functioning of the board.

Furthermore, you can expect a capable company secretary to help ensure good information flows within the board and its committees, as well as between senior management and non-executive directors.

The right company secretary can also be fundamental to the maintenance of good shareholder relations for a company, including by keeping the board informed on the views of shareholders.

What else should a company secretary do for an organisation?

It is also customary for a company secretary to develop and oversee the systems that are crucial to ensuring compliance with all applicable codes and legal and statutory obligations.

These professionals also routinely keep an eye on the latest changes to relevant legislation and the regulatory environment, taking action when necessary.

In addition, your organisation might take an interest in company secretarial subscriptions – like those of London Registrars – in order to take advantage of services like the maintenance of the statutory registers and the minute book, and the filing of changes with Companies House after ensuring that these are supported by the appropriate authorities.

You might also count on your chosen company secretary to undertake such duties as the organisation of board meetings and AGMs, and the preparation of agendas, the preparation of the minutes and matters arising schedules.

Contact us now about our company secretarial subscriptions

Whether you are seeking the services and expertise of a company secretary for your private limited company, public limited company, LLP or non-listed PLC – among the many options we present – we would be pleased to discuss your requirements when you reach out to us.

Simply call us on 07415 107436 or email [email protected] for further information and advice.

27 January 2021

Many of the businesses using London Registrars’ company secretarial services, such as central London registered office addresses and register of shareholders maintenance, may be interested to learn that the UK Treasury has extended its emergency business loan scheme.

The news means that firms can now request to “top up” their borrowing, as the government looks to shore up businesses at a time of continuing restrictions to limit the spread of the coronavirus.

What do businesses need to know?

Companies in the UK have now been given until the end of January to apply for emergency business loans, including bounce back loans (BBLS), coronavirus business interruption loans (CBILS) and the CLBILS scheme for bigger firms. This is a two-month extension on the previous 30 November deadline, and also covers the Future Fund, which targets UK start-ups.

Chancellor of the Exchequer Rishi Sunak stated on Twitter in early November: “To help more businesses access additional support, deadlines for applications to our government-backed loan scheme and the Future Fund have been further extended until 31 January 2021.”

The changes include previous small-business recipients of funds through the BBLS programme being entitled to ask for top-ups to existing loans if they require further cash. The Bounce Back Loan Scheme offers businesses cheap loans worth as much as £50,000.

The maximum amount available for firms to borrow through the BBLS scheme is 25% of their turnover, up to a £50,000 limit, and the top-up is intended to assist businesses that borrowed less than this amount.

A government document describing the changes read: “We understand that some businesses did not anticipate that the disruption to their business from the pandemic would go on for this long; this will ensure that they are able to benefit from the loan scheme as intended.”

The document also stated, however, that firms requesting a top-up would only be able to do so once.

Reality of second lockdown prompted a review of government-backed loans

The imposition of a second nationwide lockdown in England from early November seemingly accelerated the need for additional funding to support under-pressure businesses.

It led to the Treasury convening an emergency meeting with Britain’s largest banks, including HSBC, NatWest, Lloyds and Barclays, in order to review the government-backed loan programme’s terms.

Among those to welcome the Treasury’s announcement was Conservative MP Kevin Hollinrake, who also serves as co-chair of the all-party parliamentary group (APPG) on fair business banking.

However, he said a longer extension into mid-2021 would benefit firms, and that the top-ups should also apply to the bigger CBILS scheme, which enables businesses to borrow as much as £5 million, and comes with an 80% government guarantee.

Enquire now to learn more about how we could serve your company

Whatever the challenges that the next few months pose to your firm, we stand ready and waiting here at London Registrars to assist your company with its governance, risk and compliance requirements.

Call 020 7608 0011 or email [email protected] today to find out more about our basic company secretarial support packages, maintenance of the statutory registers and the minute book, Companies House filings and many other aspects of corporate governance.

December 2020

A review by the Financial Reporting Council (FRC) has concluded that corporate reporting on climate change must improve to meet the expectations of investors and other users.

The regulator expressed its backing for the introduction of global standards on non-financial reporting. In the meantime, it urged UK public interest entities to report on the TCFD’s (Task Force on Climate-related Financial Disclosures) recommended disclosures, as well as the SASB (Sustainability Accounting Standards Board) metrics for their industry.

Regulator underlines importance of a “reporting framework”

The FRC’s review found that while climate change may not be the most immediate challenge for some companies, there was a need for it to be integrated into decision-making now, to enable the subject to be addressed in an orderly way.

The regulator said that its review reflected the important part played by boards, companies, auditors, professional organisations and investors in considering and responding to climate-related issues, adding that “each has the capacity to act as a driver of change.”

What were the key findings of the review?

Various findings, expectations and next steps were set out by the FRC review which concluded that there was only “limited” evidence of business models and company strategy actually being influenced by climate considerations.

Furthermore, the review stated that, while some companies had set strategic goals such as “net zero”, their reporting did not make clear how progress towards these goals would be achieved, monitored or assured.

An increasing number of companies did provide narrative reporting on climate issues, frequently meeting minimum reporting requirements. Users, however, were calling for additional disclosures to inform their decisions.

The review also concluded that the manner in which climate change matters were considered and disclosed in the financial statements “lags behind narrative reporting”. Indeed, the review noted areas of possible non-compliance with the requirements of International Financial Reporting Standards.

There was also considerable variation across firms in the quality of support, training and review provided to audit practices on climate change. Audits reviewed indicated a requirement for auditors to improve how they considered climate-related risks in the planning and execution of their audits.

UK professional bodies and audit regulators in the Crown Dependencies were responding to climate change, the report said, but differences were observed in the substance and granularity of their approaches.

In addition, while investors backed the TCFD framework, they also wished to see disclosures in relation to the financial impacts of climate change. As the review noted, investors are themselves subject to evolving regulations.

“Now is the time for all of us to raise the bar”

Sir Jonathan Thompson, FRC Chief Executive, commented: “Users of corporate reports expect more from companies, auditors, regulators and standard setters in terms of climate change reporting.

“While this review highlights some bright spots of better practice in both corporate reporting and auditing, we also found that more needs to be done. I know that this is a difficult time to ask for more, but now is the time for all of us to raise the bar.”

Ask us today about our company secretarial services

Whether you approach the London Registrars team with an interest mainly in the effective maintenance of statutory registers, directors’ service addresses, or any other aspects of our highly rated company secretarial and governance support services, we would be pleased to hear from you.

When you do contact us – as is possible via email, phone or fax – we will be able to discuss with you how our corporate governance know-how could serve your organisation for months and even years to come.

November 2020

With the transition period formerly agreed by the UK and the European Union (EU) as part of the former’s departure from the bloc nearing its end, Companies House has written to European Economic Area (EEA) companies about changes in filing requirements that will soon come into effect.

More specifically, the Registrar has said that from 11pm on 31 December 2020, EEA companies registered with Companies House in accordance with the Overseas Companies Regulations will be required to provide further information, aligned with that demanded of non-EEA companies.

What extra details will such firms be expected to provide?

Companies House has stated that the additional information it expects EEA companies to supply will include details on the law under which the given company is incorporated, as well as the address of its principal place of business or registered office.

These firms will also be asked to outline the company’s purpose – its ‘objects’ – and the amount of share capital issued. Furthermore, in the case of companies required to prepare and disclose accounts under their parent law, the accounting period and period of disclosure must be provided.

The companies subject to these latest changes will include EEA companies who have already registered a branch of their overseas company in the UK, as well as all new overseas company registrations made after exit day – the principle being that the same requirements will apply to all non-UK registrations.

More information must also be included on client or public-facing material

In addition to the above, the Registrar has set out the further details that EEA companies will need to include on their materials for public or client consumption, such as their websites, letterheads and order forms.

Such information will encompass the location of the given company’s head office, the legal form of the company, and its limited liability status. The company’s share capital must also be stated on these materials, as well as – if applicable – notice that the company is being wound up or is subject to insolvency or any other analogous proceedings.

Companies House has told EEA firms that they will have three months from 31 December to supply this additional information, adding that from this date, an amended OSCH02 form to update company details will become available on its website.

The new requirements arise from the Companies, Limited Liability Partnerships and Partnerships (Amendment etc.) (EU Exit) Regulations 2019.

We can advise and assist where needed

If there is any uncertainty for your organisation as to its corporate governance obligations as we look to the final few weeks of 2020 and into 2021, we would be pleased here at London Registrars to give you the benefit of tailored advice and support.

The risk, compliance and legal services that we offer include such aspects of company secretarial practice for PLCs as a Central London registered office address, directors’ service addresses, and maintenance of the register of directors and secretaries, among other areas of expertise.

To learn more about these and our other renowned services and solutions, you are welcome to enquire to our team via phone, fax or email today.

November 2020

As a key and trusted provider of company secretarial subscriptions and related services here at London Registrars, we took much interest in the Financial Reporting Council (FRC)’s recent release – through its Financial Reporting Lab learning space – of advice on how companies can make their section 172 statements more useful.

More specifically, of course, this relates to section 172(1)(a) to (f) of the Companies Act 2006. We quote section 172 in a lot of the resolutions we draft for our clients, because the Act states that directors must make their decisions in the best interests of their company.

This is now statute law, having previously been covered by common law and part of the fiduciary duties directors had vis-a-vis their companies. But what are some of the most helpful tips that the FRC outlined with regard to such aspects of the section 172 statement as what content to include, how to present that content, and how to facilitate the process of the statement’s preparation?

First of all… why were section 172 statements introduced?

Section 172 statements were brought in by The Companies (Miscellaneous Reporting) Regulations 2018, to be first applied to the reporting periods of relevant companies for financial periods commencing on or after 1 January 2019. The FRC then issued a clarification in May 2018 as to which companies ought to prepare such statements.

The introduction of these requirements was driven by a wish to maximise insight and accountability, in light of concerns that boards were failing to pay enough attention to their responsibilities towards both shareholders and stakeholders.

In the words of the UK Corporate Governance Code: “The board should understand the views of the company’s key stakeholders and describe in the annual report how their interests and the matters set out in section 172 have been considered in board discussions and decision-making.”

What are some of the tips the FRC has outlined?

The following are just some examples of the advice the regulator has laid out for companies looking to compose more effective and useful section 172 statements:

• Start early. Companies are urged not to simply compile relevant information for their section 172 statement at the end of each year, but to highlight the key decisions and engagement activities that may be worthy of inclusion in the statement as they take place, over the course of the year.
• Be specific and genuine, instead of simply ‘box-ticking’. The FRC has also called for firms to not treat the section 172 statement as a mere compliance exercise. The statement should not just duplicate the section 172 requirements and state compliance; instead, the focus ought to be on how the company fulfilled those requirements, what happened during the year, and – where applicable – what the board and management’s intended future actions are.
• Explain the ‘why’. Also included in the regulatory body’s tips was the importance of setting out the board’s reasoning on why particular stakeholders are identified as key, why given engagement methods were effective, and why certain decisions were taken in light of engagement and feedback that may have accumulated over time.
• Consider the statement’s flow and context. In accordance with the regulations, a section 172 statement must be included within the Strategic Report, or elsewhere by cross reference. The statement should reflect the link to the organisation’s strategy, in addition to being clear about the board’s role. Companies are also encouraged to think about how the statement fits into the context of stakeholder engagement.
• Make the statement visible. The FRC has also said each company’s section 172 statement should be clearly labelled and referred to in the annual report’s contents page.

During these testing times, London Registrars remains by your side

If you would appreciate further tailored advice, guidance and assistance in relation to various elements of your corporate governance and compliance practices, we are available here at London Registrars to serve those needs – including through the provision of company secretarial subscriptions.

Reach out to us now by calling 020 7608 0011 or 07415 107436, or sending us an email, and we will be both pleased and well-placed to help you with your query.

November 2020

Late June 2020 saw the Corporate Insolvency and Governance Act (the Act) receive Royal Assent and become part of UK law.

While the Act contained a range of provisions, it particularly focused on alleviating some of the difficulties which UK companies were facing due to the COVID-19 pandemic, in relation to such vital functions as holding shareholder meetings and filing accounts with Companies House.

As the impact of the pandemic continued to make itself felt, the decision was made to extend the duration of some of these temporary measures in September 2020.

With kind permission, we have therefore reproduced international law firm Bird & Bird LLP’s explanation (in italics) of what these extended measures mean for a company’s meetings and filings.

The Act includes the following in relation to company meetings and filings:

Meetings 

The Act includes various provisions to make it easier for UK companies to hold meetings, in light of lockdown and social distancing measures. 

The provisions originally applied to meetings held between 26 March and 30 September 2020 but they could be extended by subsequent Regulations by periods of up to 3 months (but not beyond 5 April 2021). Regulations made in September 2020 have provided an initial extension of this period to 30 December 2020.

The Act applies retrospectively, so that proceedings at meetings held after 26 March 2020 may be validated if they would otherwise be in breach of legal requirements and the provisions of the company’s constitution.  

The Act provides, in relation to meetings of shareholders and classes of shareholders of UK companies, that:

• meetings do not need to be held in a particular place and may be held by electronic means;
• the meeting may be held without any number of those participating in the meeting being together in the same place;
• votes can be cast by electronic or other means; and
• persons attending the meeting have no right to attend the meeting in person, to participate in meetings other than by voting, or to use a particular method of voting (such as by show of hands).

These provisions override the requirements of the Companies Act 2006 and a company’s constitution (articles of association).

The Act allows the Secretary of State to make Regulations regarding the form of, and the means and timing of the sending of, notices and other documents relating to meetings. Once again, these Regulations may amend existing laws and override provisions of a company’s constitution.

Annual General Meetings (AGMs) 

Where a company was required by law or by its constitution to hold its AGM (and, for a public company, the meeting where it was due to lay its accounts before members) on any date during the period leading up to 30 September 2020, that meeting could be held at any time before 30 September 2020 (this period has not been extended).  

Period for filing accounts 

Under the Act, UK public companies which were otherwise due to file their accounts in the period after 25 March 2020 and before 30 September 2020 have until the earlier of 30 September 2020 and the 12-month anniversary of the end of their relevant accounting period to do so. The Companies Act 2006 normally requires the accounts of a public company to be filed within six months of the end of the accounting period.  

Pursuant to the Act, The Companies etc. (Filing Requirements) (Temporary Modifications) Regulations 2020 (the Filing Regulations) were introduced on 26 June 2020 and they automatically extend the accounts filing deadline for UK companies by three months (to 12 months for private companies and to nine months for public companies) where the filing deadline falls any time from 27 June 2020 to 5 April 2021 (inclusive).  For public companies whose original accounts filing deadline fell on or after 30 June 2020, before it was extended by the Act, the extension available under the Regulations will supersede the extension under the Act.  The extensions under the Regulations may not be available for companies that have previously shortened or extended their accounting reference period, or which are filing their first accounts.

For public companies with shares admitted to trading on public markets, the time periods allowed by applicable market rules for the publication of accounts should also be considered. For example, as a temporary measure, public companies with shares listed on the London Stock Exchange’s Main Market, which have the UK as their home state, may be given an additional two months to publish their audited annual financial reports (an extension to the four-month period normally allowed).  A company with its shares listed on AIM can apply (through its nominated adviser and before its current deadline) for an extension of up to 3 months if its financial year ended between 30 September 2019 and 30 June 2020 (an extension to the six-month period normally allowed).

Company filings 

The Filing Regulations also automatically extends the time periods for making various filings at Companies House:

Document	Due to be filed before		Normal deadline		Extended deadline
Confirmation statement	6 April 2021		14 days		42 days
Event driven filings (including changes to details of directors, secretaries, people with significant control and registered office address)	6 April 2021		14 days		42 days
Particulars of mortgages and charges	6 April 2021		21 days		31 days

Comment

We welcome this piece of legislation from the Government, and the extension to some of the temporary measures, which will give companies some certainty about how they hold meetings this year and some assurance that meetings they have already held may be effectively ratified in law.   

It seems more than likely that these provisions will be further extended, into 2021, given the new Government restrictions on meetings of groups of people, which it has said may continue for 6 months or more.  Companies may wish to use this opportunity to review the provisions of their articles of association and to introduce more flexibility in the way that they hold their meetings, in readiness for when these temporary protective measures come to an end.

The extended filing deadlines will also be helpful as it has been more difficult to arrange the signing of paper forms and documents to make filings at Companies House during the COVID-19 crisis.   

For peace of mind about company compliance, get in touch with London Registrars

When you require comprehensive company secretarial services encompassing everything from a registered office address and directors’ service addresses to Companies House filings maintenance and the recording of charges in the register of charges, the London Registrars team is well-placed to serve those needs.

To seek out the benefit of our expert advice and guidance, please simply email us, give us a call on 020 7608 0011 or 07415 107436, or fax 020 7608 1373.

November 2020

Concerns have been raised in several quarters about potentially fraudulent use of the Bounce Back Loan Scheme (BBLS), which was designed to provide financial support to UK businesses adversely hit by the coronavirus outbreak.

The BBC recently reported that the government-owned British Business Bank (BBB), which supervises the scheme, twice aired such concerns.

The corporation has claimed that criminals have been setting up bogus companies to obtain loans worth tens of thousands of pounds.

Recognition of “risks” from an early stage

Just two days before the scheme’s launch in early May, BBB chief executive Keith Morgan wrote in a letter to Business Secretary Alok Sharma of the “very significant fraud and credit risks” the initiative posed, explaining that it was “vulnerable to abuse by individuals and organised crime”.

Mr Morgan told the minister that the bank was unable to guarantee “robust controls”. He said he was also concerned about an “extensive reliance on customer self-certification” and “potential for market distortion”. He added that the BBB had commissioned accountants PwC to undertake a review of the scheme, with this resulting in its fraud risk being classified as “very high”.

The letter was dated 2 May, and followed an email warning the previous day. Mr Morgan also sought to draw attention in his letter to the “huge operational challenges” created by the scheme’s rapid introduction.

However, Mr Sharma said the scheme should proceed despite the risks, due to what he described as the “unprecedented situation facing the country”.

Shocking revelations of fraud

Bounce Back Loans are loans of as much as £50,000, entirely backed by the government. Borrowers have six years to pay off the loans, which are interest-free for the first 12 months.

Recent figures from the Treasury indicate that some 1.55 million applications have been made to the scheme, with 1.26 million of these being approved and more than £38 billion being paid out.

However, the BBC’s Angus Crawford recently revealed how fraudsters were exploiting the loan scheme. One victim, Mark Telling, had his personal details stolen to create a bogus company, Tellings Home Made Furniture, which “borrowed” £50,000 via the system.

The news of such abuse comes after National Audit Office comptroller and auditor general Gareth Davies cited Bounce Back Loans as “probably the riskiest” of the government’s COVID-19 bailout measures.

“A lifeline to thousands of businesses across the UK”

A government spokesman defended the scheme to the BBC, stating: “Our loan schemes have provided a lifeline to thousands of businesses across the UK – helping them survive the outbreak and protecting millions of jobs.

“Our support has been targeted to ensure we help those who need it most as quickly as possible and we won’t apologise for this.”

He added that the government worked alongside agencies to reduce fraud, “with lenders implementing a range of protections including anti-money laundering and customer checks, as well as transaction monitoring controls.

“Any fraudulent applications can be criminally prosecuted for which penalties include imprisonment or a fine or both”.

Could your organisation benefit from specialist assistance to help guide you through the COVID-19 storm? If so, you are welcome to get in touch with London Registrars to ask about the depth and breadth of our expertise in relation to all aspects of corporate governance, risk and compliance.

For more information about our company secretarial practice for PLCs and our various other business and legal support services, simply contact us via email today.

October 2020

Of interest to many London Registrars clients making use of such services of ours as the preparation and submission of the annual Confirmation Statement and the maintenance of statutory registers, will be the news that Companies House is ending its previous temporary voluntary strike off policy.

The registrar actually announced the change on 10 July, outlining that they would restart the process for companies that had applied for voluntary striking off in the autumn.

What’s changing?

Companies House introduced temporary easement measures in March 2020 to suspend voluntary strike-off action in the wake of the COVID-19 outbreak.

The executive agency subsequently reviewed the temporary arrangements each month, and after its July review, decided to lift them from 10 September. Since that date, it has resumed the process of dissolving companies that had applied for voluntary dissolution.

How will the resumed process work?

Since voluntary striking off action recommenced, Companies House policy has been that if there have been no objections to a dissolution and the two-month period from the Gazette notice’s publication has expired, the company will then shortly be struck off.

If a person with an interest in a given company has already registered an objection, but the time period for that objection is set to expire, that person must re-register the objection if it is still needed.

Applications for voluntary strike off since 10 July 2020 are not impacted by the temporary policy, as the easements for voluntary dissolution apply to strike-off applications registered prior to that date.

Meanwhile, the compulsory strike off process – by which Companies House strikes off companies it believes to no longer be in operation or carrying on business – is set to resume from 10 October.

Reach out to London Registrars about how we can serve your needs

With Companies House confirming that all companies that applied to be struck off prior to July 2020 will be struck off the register in a phased approach in the four weeks from 10 September, the change will bring important certainty for many businesses.

Remember that whatever your own organisation’s requirements may be in relation to such areas of expertise of ours as corporate governance, risk and compliance, London Registrars is ready and waiting to provide tailored advice and guidance.

Contact us via phone or email today, and we will be pleased to address your query and point you towards the solutions of ours that can help.

September 2020

Recently, we wrote about the decision of the UK government to bring a new specified public interest consideration, in relation to public health emergencies, into existing law.

The Enterprise Act 2002 (Specification of Additional Section 58 Consideration) Order 2020 came into force on 23 June, with section 58 of the Act having been amended to add the public interest consideration: “The need to maintain in the UK the capability to combat, and to mitigate the effects, of public health emergencies”.

The actions that your business should take now

We have previously addressed the government’s reasoning for its changes to the Enterprise Act, as explained in guidance published by the Department for Business, Energy and Industrial Strategy (BEIS), which also described the amendment’s practical effects.

Also addressed in the BEIS guidance to accompany the Order’s entry into force is what companies may wish to do as a consequence of the new provisions.

In summary, according to the guidance, the new provisions do not impose any legal obligations that require companies to take action as a direct consequence of the Order coming into force.

However, it may be wise for businesses and investors, or their advisers, to familiarise themselves with the implications of these changes so that they will be well-placed in the event in any relevant merger or acquisition that might raise concerns in relation to the UK’s ability to combat, or to mitigate the effects of, public health emergencies.

The parties in a merger or acquisition that the new consideration may bring into the scope of government intervention may make the decision to voluntarily alert BEIS to the transaction. There will be no change to the statutory process for government public interest interventions, with the Secretary of State deciding on interventions on a case-by-case basis.

Nonetheless, to conform with the decisions the Secretary of State makes, the officials of central government departments will seek to work as early as appropriate, and as closely as appropriate, with the parties.

What factors will inform intervention decisions?

The exact information required by the Secretary of State to make their intervention decisions will vary from one case to the next. However, decisions are likely to be informed, in part, by such details as the following:

• which business, or part of a business, will change hands
• the identity of the individual or business acquiring an interest in the business or division, and any existing holdings they have in these or other industries
• the influence or control that this interest may give rise to. To ascertain this, the questions that will need to be asked may include how any new business is set to be structured, what share of voting rights will the acquirer have, and/or how many board members will they be able to appoint
• how this influence or control could be manifested
• any mitigations proposed by the parties to address the government’s concerns
• with whom government should engage

BEIS has indicated that it would welcome being notified by the parties to mergers and acquisitions that might raise concerns “as early as possible”, as this would enable it to begin its assessment process.

Where relevant, this also allows government to state that it has no present public interest concerns with a deal, meaning parties can choose to proceed subject to any relevant competition assessment and other regulatory processes. Parties should note, however, that such a decision is subject to change as relevant circumstances change or other details come to light.

Ask London Registrars about our secretarial and compliance expertise

With our company secretarial solutions ranging from registered office and directors’ service addresses to minute book custody and maintenance and Companies House filings maintenance, London Registrars is available to provide specialised and tailored support that will leave your organisation advantageously placed for the months ahead.

Email [email protected] or call 020 7608 0011 / 07415 107 436 today for assistance with your query.

September 2020